Starting startups in bad economy time?
in a piece, Paul Graham talk about creating startups during recession times and bad economy perspective. Hereafter I gather some of the main ideas:
The economy is obviously bad and common-sense may suggest that it is a bad idea to start new businesses such as start-ups. Graham claims that it is neither a bad nor a good time to adventure the creation of a technology start-up. The state of economy doesn’t matter.
The success of the startups are based mainly on the quality of the founders. Economy is just minor. What is important is the Who and the how, not the when. Technology progress are independent from the economy shape. A good idea should be exploited “ic et nunc”. Waiting is missing the train. However one of the issues in ignoring the economy condition is that investers are more reluctant to invest, even though its common sense to by when times are bad and sell when it’s good. But founders have to adapt. previously you would have to convince that your startup was viral, next you would have to convince that your “startup is recession-proof”. To make it recession-proof, its like anytime before: run it as cheaply as possible in order to be difficult to kill because you ran out of money.
An advantage of bad time is that it lowers the competition; everyone else is cowering. Founders are ultimately like investors. They should invest in their own business when time is bad to make profit when it gets better. However its difficult to say that the advantages such as lack of competition can outweigh disadvantages such as cowering investors. Nevertheless remember that what matters are people.
Why do I blog this? I’m in the very last sprint of my Ph.D work and the idea of going independant is of course appealing. However I did not yet seriously thought about opening a startup. Probably because despite what Graham says, it’s not only the people that matters, but the ideas as well. However even though it could appear as a commonsense, it’s quite thought-provoking. I would say that I’m kind of despointed by the final conclusion. As the author say it himself: “The truth is more boring: the state of the economy doesn’t matter”. Except perhaps for finding a job.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
